Flood of criticism
U.S. Rep. Bill Johnson, R-Ohio, discussed what he called the “Band-Aid” that the federal government passed to help the drastic rise of flood insurance rates with local business professionals Thursday afternoon at the Marietta Brewing Company.
As a result of the 2012 Biggert-Waters Flood Insurance Reform Act passed to changes rates to be “more reflective” of actual flood risks, property owners across the country saw rates increase by several hundred percent. Johnson voted in favor of the 2012 measure.
On March 21, President Barack Obama signed the Homeowner Flood Insurance Affordability Act into law to set back insurance costs to their original rate, a temporary fix that both Johnson and business owners say is not a long-term solution.
“This will give us more time to find sanity in Washington,” Johnson said. “But this is just a Band-Aid, not a fix.”
With HFIAA, any Pre-Flood Insurance Rate Map properties, or properties typically built before a community produced a detailed flood map, that were not insured on July 6, 2012, when Biggert-Waters was passed; any properties that were sold on or after that date; or any that were rated a full-risk under the law will all see rates restored to what they were before the law was passed.
Tony and Dana Styer, owners of the Marietta Brewing Company, were there to speak with Johnson, as they saw their annual insurance rate increase from $2,300 in 2013 to $23,000 in 2014.
The Styers were under the category of property owners who saw the drastic rate increase because they either purchased insurance or changed their policy after 2012.
“When this was passed, they weren’t thinking of the Ohio Valley,” Tony said. “And this won’t do us a bit of good.”
Any property, residential or commercial, that obtained a flood insurance policy after 2012, was subject to the base rate increase of 25 percent annually until rates reach true flood risk, which encompasses about five percent of policyholders.
“Flood insurance should be like car, house or life insurance, where you should be able to have choices for what works best for you,” Johnson said. “Instead, it’s been constantly subsidized for years, and now it is $24 billion in debt.”
Johnson said the original law was a result of the Federal Emergency Management Agency trying to extend the 1968 National Flood Insurance Program, so that properties not built to new standards of flood risk would be insured based on the actual flood risk of the area.
The majority of Congress, including Johnson, voted for Biggert-Waters, citing the concern that without it, the government might have to repeal NFIP as a whole, leaving property owners at risk.
The action is in effect for eight months, in which time Johnson said FEMA will be trying to work with Congress to find a new rate structure, while many in Congress hope to reform the system in a new way.
“Right now there’s an appetite to privatize flood insurance,” Johnson said. “Schwendeman Insurance or any private company you all have down here can do a better job of this than the federal government.”
Bill White, CEO of Offenberger & White, said he hopes that privatization will come, as he is concerned that Marietta’s unique community structure needs its own plan.
“We don’t need a statistician to tell us that small businesses run this economy, and this is destroying it,” White said. “The river and the weather hasn’t changed, the only thing that has changed is the cost to do the same thing we’ve already been doing.”
White said the investment in old properties and historic areas is vital to the tourism in Marietta, and that the government needs to recognize that no two communities are alike in needs.
“There’s a level of responsibility attached to people like us who invest in these properties. We know we will get high water,” he said. “We get it, we clean it up, we go back to work.”
Business owners like the Styers have more cause for frustration, as FEMA flood insurance policies only cover structural damage caused by a flood.
“You’re not even paying this for protection, you’re paying so you don’t default on a loan,” Tony said. “If this floods, and we can’t get chairs and tables up off the ground in time and everything is damaged, we still have to pay.”
Johnson said there are Democrats and Republicans in the House who represent communities affected and there is a bipartisan effort to help find a more permanent solution, though he could not name any concrete plan.
“Until we get cooperation out of the Senate and out of the White House to stop taking more from the American people, we will always have this problem,” Johnson said.